Individuals who wish to claim deductions under section 80G need to ensure that the organization they are donating to falls under the overview of this Act.
Only those donations are suitable for deductions which are registered under valid funds or charitable institutions. Trusts and charities need to be registered under Section 12A post which they qualify for the 80G certificate.
Individuals are advised to check the credentials of an organization before donating to it.

1. Donations with 100% deduction (Without any qualifying limit):

Donations made under this category enjoy 100% tax deduction and are not subject to any qualification limit being met.

• National Defence Fund donations
• Prime Minister’s National Relief Fund
• The National Foundation for Communal Harmony,
• National/State Blood Transfusion Council.

2. 50% Deduction Donations (Without any qualifying limit)

Donations made towards these trusts qualify for 50% deduction.

• Prime Minister’s Drought Relief Fund,
• National Children’s Fund,
• Indira Gandhi Memorial Fund, etc.

3. Donations with 100% deduction (Subjected to 10% of adjusted gross total income)

Donations made to local authorities or government to promote family planning and donations to Indian Olympic Association qualify for deductions under this category. In such cases, eligibility for deductions amount only to 10% of the donor’s Adjusted Gross Total Income.

4. Donations with 50% deduction

Donations made to any local authority or the government which would then use it for any charitable purpose qualify for deductions under this category. In such cases, eligibility for deductions amounts only to 10% of the donor’s Adjusted Gross Total Income. Donations which exceed this amount are capped at 10%.

Receiving the bill:

The bill/invoice helps to track the number/quantity of goods purchased in the case of items. When the bill is paid on time, the date for which the bill is valid may also be identified.

Scrutinizing the bill for information:

It is also possible to check the name, licenses, date, and conditions of the vendor raised with the vendor based on the purchase order..

Updating the information on the paid bills:

It is important to update Ledger accounts linked to the received bills. Here in the account books, an expenditure entry is normally expected to be made. In cases where accounting software is used, it can require managerial permission to report certain expenditures. Based on the bill value, the approval would be based. As a precautionary measure, the ‘builder and checker’ principle for posting is typically adopted by large organizations.

Timely Payment Making:

The payments need to be processed when and when the due dates arrive (based on a shared agreement with the vendor/supplier/creditor). Here it is important to prepare and verify the appropriate documents. It is important to scrutinize the details entered on this cheque, bank account details of retailers, payment vouchers, the original bill, purchase order/agreement, etc. The signature of an approved individual will often be needed. The vendors/providers/creditors ledger account must be closed in the account books until the payments are made. This will lower the previously created liability. The sum displayed as payable, in simpler terms, would no longer be considered as a liability. The above methods are organization-specific. For large firms with more approvals required, they may be more stringent. However before payments are made, the basic precautions must be taken into account in order to prevent errors and fraud.

Individuals wishing to claim deduction under Section 80G need to have the following documents to support their claim.

• Duly Stamped Receipt: It is mandatory to have a receipt issued by the trust/charity which receives a donation.
• Form 58: If the donor intends to claim 100% deduction on a donation than it is essential to file form 58, without which their donation will not be eligible for 100% deduction.
• Registration Number of Trust: Registration number by Income Tax Department is provided to each eligible trust and donors should ensure that their receipt contains this number.

The validity of registration number is necessary and on the date of a particular donation, failing which a donation might be ineligible for deductions.
For any help on ITR Filing feel free to consult the tax experts at LegalRaasta. You can file ITR yourself via our ITR software or get CA’s help on filing an income tax returns. You can also use the option of Business Return, Bulk Return or Revised Return Filing.

Our team of experts at legalraasta will liaison with concerned departments, to obtain the “80G-12A certificate” for you and your NGO. An 80g certificate will allow you as a donor to obtain income tax benefits and A 12A certificate will allow the NGO obtain to avail the benefit of income tax exemption.

Connect with the team of legalraasta to address specific requirements for your business. It only takes a total of 20-25 minutes for a complete discussion with our expert consultant.

Once you explain the terms, we will arrange dedicated Account managers, who will give you the best solutions and help you with the whole process.

Use our platform to follow the progress of your application and many more. Always know what is going on with your application, and what is in development.